1. Fighting climate change and defending jobs in metal energy intensive industries: pushing for innovation and investment ETUI, Brussels 29 March 2011

2. Metal EII: Many shared characteristics High capital and energy intensity (massive long-term investments) Intensifying global competition –Emerging economies (BRICs) –Dependence on the international markets for raw materials (end of longer term contracts/spot prices) –High prices of scrap and electricity Impact of the economic crisis – production increasing back towards pre-crisis levels but employment falling (precarious work increasing) Part of the problem and the solution: Importance of innovation and quality

3. Metal production: the industrial backbone Steel Production Raw Materials Trade 1st Processors Finished Product Iron Ore Coke Scrap ElectricitySteel MillsEquipmentComponents Processors Automotive Machinery

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5. Sectors at a high risk of carbon leakage Even if increased prices are relatively modest, EU producers have comparative disadvantage (ETUC/Syndex 2007): –High risk of replacing low-carbon-intensity ‘cleaner’ metals produced in Europe with higher-carbon-intensity metals in countries without emissions restrictions in place –Direct consequence for employment in Europe and emissions worldwide

7. Energy intensive industries: Steel

8. Steel Employment (420,000 direct) - no excess capacity anymore after decades of restructuring + the current crisis 30% of steel products offered today didn’t exist 10 years ago: surface treatment, alloys, lightweight steel solutions, special steels (e.g. for wind mills), sustainable steel construction (longer life-time of buildings, better energy performance) Over past 40 years, CO2 and energy consumption decreased by 50% and 60% respectively Almost all the steel of cars is recycled (by 2015 95% of all car materials must be completely recycled) 8

9. Production increasing but recovery still fragile

10. Steel and CO2 emissions Close relationship between steel production process and production of CO2 (30% total industrial emissions): –Pig-iron process (60% of European steel production): each tonne of steel produces about 2 tonnes of CO2 –Electric process (40% of European steel production): each tonne of steel produces about 150kg of CO2 Chemical and physical laws are limiting the reduction potential, although increased energy efficiency still has role to play (especially considering the cost of CCS) EMF is heavily involved in the promotion of new technologies reducing emissions – e.g. through ESTEP

11. Importance of innovation and R&D for EII

12. Energy intensive industries: Non-ferrous metals

13. Non-ferrous: from base metals to new materials 400.000 employees Key in a sustainable production strategy, but energy intensive closing the material loop Technological solutions in energy- and material-savings in transport, aeronautics, ICT, telecoms, construction From base metals to new materials, special alloys, special coatings, nano-powders which contribute to reduce the use of scarce resources Sharp increase in secondary production (much better organisation of recycling, technological breakthroughs in recycling techniques): 60% of lead production, 65% of aluminium and 57% of refined copper, 58% of zinc, 36% of precious metals originate from scrap metals 13

14. Impact of China

15. Importance of energy prices: energy source

16. Kayser Recycling System (KRS) Modern recycling technology Traditional recycling methods Recycling electronic waste from the EU 27 EU raw materials strategy should ensure that no escaping to ‘carbon havens’ outside Europe: e.g. copper recycling

17. Tackling carbon leakage in the ETS 3rd phase Link to carbon leakage decision: In terms of allocation rules, two categories of operators: –100% of the benchmark (carbon leakage sectors) or –80% reduced to 30% in 2020 of the benchmark for sectors not exposed to risk of carbon leakage Carbon leakage list was determined in December 2009: –52 benchmarks for different products of 20 industrial sectors –Steel and non-ferrous metals sectors were included

18. 18 Example of a product benchmark curve

19. Compensating for passed- on costs Financial compensation for indirect emissions (higher electricity prices) possible through state aid for some electro-intensive carbon leakage sectors. COM to determine new state aid rules: adoption foreseen 2011/12 EMF demanding immediate application: a) sectoral scope (ensuring the coverage of non-ferrous and electric-arch steel recycling) b) acceptance of interim compensation measures on passed-on CO2 costs before 2013. c) any state aid must be tied to continuous improvement of environmental performance and the use of best available technology (BAT) to stimulate investment and innovation.

20. Sustainable manufacturing Aim: -83 - -87% industrial emissions by 2050 From end-of-pipe solutions to a focus on product lifecycles and integrated environmental strategies Evolution to closed-loop, circular production systems and acceptance of environmental responsibilities throughout the value chain 20

21. European metalworkers on the road from Copenhagen to 2050 Urgently need a European ‘Green’/Sustainable Industrial Policy Agenda based on private & public investment/funding Sectoral screening and clear transition plans R&D, demonstration and deployment Investment in energy infrastructure Regulation, standardisation and enforcement Creating an international sectoral level playing field to avoid carbon leakage: UNFCCC Ensuring a socially just transition to a low-carbon economy: ensuring training, quality employment and the anticipation of change with full worker participation Greening of all our workplaces